Google Escapes Antitrust Shackles

FTC's antitrust case against Google appears to be winding down without Google being slapped with any penalties or restrictions. Be glad.

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Google's gift this holiday season appears to be a pass from the government. The Federal Trade Commission is expected this week to conclude its two-year old antitrust investigation of Google's search business without imposing any significant restrictions on the company, the Wall Street Journalreports.

The deal is said to include some voluntary changes in the way Google handles search, but no formal consent decree.

It's a slap on the wrist and it's the right decision.

Google's handling of its search business and the way in which it applies its market power should be scrutinized, but the fundamental premise of the FTC's inquiry -- that Google is abusing its search monopoly to harm consumers -- just doesn't ring true.

That's not to say Google isn't an aggressive competitor that sometimes crosses the line. It is and it has been punished for its most egregious missteps. For example, it was fined $500 million for advertising illegal prescription drugs in 2011. However, Google's version of business hardball is no worse than the way Apple, Facebook, Microsoft or other large companies behave. Apple's security restrictions on its Nitro JavaScript engine, for example, are arguably anticompetitive -- they make Chrome for iOS slower than mobile Safari -- but that doesn't mean antitrust enforcers are the answer.

Google isn't out of the woods yet: The European Union might come down harder on Google. And if it does, that's likely to be a function of protectionism more than real consumer harm. Remember the French effort to create a rival search engine, Quaero? Germany was involved in the effort briefly but later abandoned the project in part because German software engineers "did not want to be associated with an anti-Google project."

Sorry, but resentment of Google's success is not part of antitrust law. Search turns out to be hard -- really hard, in fact. Google was not always the leader in search but it got there with a particularly good relevance algorithm and a way to support its business with ads.

There's no reason other companies can't compete, if they have the resources. Microsoft has a very competitive search engine, Bing, the product of no small amount of investment. But Bing has had a hard time winning customers away from Google. Perhaps Internet users remember life under Microsoft, the monopolist of its day, a company that still has an undue influence on business IT due to its Office and Windows products. Or perhaps Bing just needs to be significantly better than Google before it can surpass Google in popularity.

If Microsoft were Mozilla, a non-profit entity dedicated to open standards and improving the Web for everyone, Google might see a lot more disillusioned users abandoning its search engine. But it isn't. Were Google forced to close tomorrow, it's hard to see how a search engine run by any other company would represent an improvement.

Businesses such as Yelp have complained that Google takes their content and displays it to its own advantage. That's a fair complaint, assuming you ignore Yelp's exploitation of its users -- those writing for Yelp or any online site ought to be compensated for their work. Yelp should be able to keep Google from using Yelp content to improve Google products. But if you accept that Yelp gets to monetize unpaid writers while preventing Google from doing the same, Google should be afforded the same privilege: It should not be forced to promote Yelp by including it in its search index.

In written testimony to Congress last year, Yelp CEO Jeremy Stoppelman posed the question, "Is a consumer (or a small business, for that matter) well served when Google artificially promotes its own properties regardless of merit?"

Perhaps not, but plenty of businesses promote their own properties regardless of merit. Consider the promotional effort behind Apple Maps, Microsoft Zune and the Google Nexus Q. If merit were a prerequisite for marketing, the airwaves would be all but ad free.

The fact is it's very difficult to establish merit for most products. Thankfully, free market capitalism puts decisions about merit into the hands of consumers. Google can define relevance as it sees fit and consumers can turn to another search engine if they're unsatisfied.

The assumption that Google is obligated to represent everyone fairly in its search results might be convenient for a lot of Internet businesses, but it's inconsistent with the freedom that businesses and citizens supposedly have. Search is not a utility that's subject to regulation. Perhaps it should be, but it isn't at the moment.

There's no right to be included in Google's search index. If Google wants to have Google Search return only links to Google-owned websites, the company really ought to be able to do so, just as other companies can decline to allow Google to index their content. And if Google fails to serve the public with its biases, then the public has other options.

If the standard of antitrust enforcement is business harm, then Google is guilty. But antitrust law concerns consumer harm, and there Google has been mainly beneficial. It offers products and services for free that other companies would have consumers pay for. Google's products might not be as good in all cases -- many people still prefer Microsoft Office to Google Apps -- but choice is pro-consumer. Be glad the FTC looks like it won't try to constrain that choice with heavy-handed regulation.

Anti-trust law is a very tricky domain. The rules for determining if a market has been harmed start with the definition of the market and then a test to see if the so-called monopolist controls or monopolizes the market. For example, when Microsoft was put to the test (and I'm not talking about the charges brought against Microsoft, but rather, just the test of whether it monopolized a market or not, which by itself is not a crime), the market was defined as "Intel-based PC operating systems." Had "Intel" been left out, Microsoft might not have passed the test because there were other operating systems on the market at the time that ran on non-Intel hardware (eg: Apple's Mac OS). But the trust-busters narrowly defined the market in a way that Microsoft passed the test and was declared a monopolist. Some would say the market was conveniently defined so as to make sure Microsoft was declared a monopolist. Beauty is in the eyes of the beholder. This is why anti-trust law has a lot of grey area.

Once it is established that a company is a monopolist, then comes the next set of tests which are to determine if the monopolist abused that power. Whereas monopolizing a market is not a crime, abusing or maintaining the monopoly position violates antitrust law and this is where the harm comes in. The question isn't whether Google has a monopoly or not (or whether other companies like Microsoft are free to compete with Google). Most search logs would support that Google does monopolize the search market. The question is whether Google is illegally maintaining the monopoly or trying to build another one on the back of the first to the detriment of would-be competitors. For example, requiring integration with Google+ in order to achieve a favorable search ranking could be viewed as an attempt to leverage Google's monopoly in search to harm other social networks. That could be an example of where Google is abusing its monopoly in search.... if it is so-deemed to have one.

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